[Congressional Record Volume 143, Number 31 (Wednesday, March 12, 1997)]
[Extensions of Remarks]
[Pages E441-E442]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                MEDICAID

                                 ______
                                 

                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, March 12, 1997

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, March 12, 1997, into the Congressional Record.

                                Medicaid

       All of us are aware of the high cost of health care. For 
     many Americans, meeting health care needs is a financial 
     strain, but it is an overwhelming prospect for those with the 
     lowest incomes. Medicaid is a joint federal-state entitlement 
     program that helps provide health insurance for 38 million 
     low-income Americans, including the blind, disabled, or 
     parents of dependent children.
       For more than three decades Medicaid has had a major impact 
     on the lives of poor Americans, helping to protect the health 
     of the most vulnerable. It has also grown into one of the 
     most costly programs in the federal budget--only Social 
     Security, Medicare, and national defense cost more. Yet 
     despite the importance and size of Medicaid, many people are 
     not very familiar with it. I often hear from Hoosiers asking 
     about the basic structure of the program.
       Who is eligible for Medicaid? Since 1965 Medicaid has had a 
     positive impact on the health of our most vulnerable 
     populations: indigent elderly and disabled persons, women and 
     children. Covering 1 of 5 children, \1/3\ of all births, and 
     \1/4\ of nursing home costs, Medicaid has clearly been 
     important. Around 14% of the overall population and some 
     600,000 Hoosiers benefit from Medicaid services.
       Some 70% of those receiving Medicaid are non-elderly poor, 
     but almost 70% of the program costs go to the other 30% of 
     recipients: the blind, disabled, and poor elderly. Not all 
     people earning low incomes are covered by Medicaid. This is 
     largely because people must meet other eligibility criteria 
     besides having low income. For example, single adults or 
     childless couples who are not disabled or aged are ineligible 
     for Medicaid no matter how poor they are. In Indiana more 
     than half of Medicaid recipients are children under 21. 
     President Clinton has proposed improving efforts to reach the 
     3 million children nationally who are currently eligible for 
     Medicaid but are not signed up.
       Because Medicaid is administered jointly by the federal and 
     state governments, states have some discretion in determining 
     eligibility. The federal Medicaid law defines some 50 groups 
     as potentially eligible. Some must be covered by the states, 
     others are optional. In general, only U.S. citizens may 
     qualify for Medicaid.
       What services does Medicaid cover? The federal government 
     requires state Medicaid programs to cover a minimum set of 
     benefits for all eligible recipients, including hospital 
     care, nursing home care, physician services, and laboratory 
     and x-ray services. A substantial portion, almost 40%, of 
     Medicaid spending goes for long-term care services such as 
     nursing home care and home care. In fact, Medicaid is the 
     primary source of long-term care coverage.
       Beyond these minimum required services, states have the 
     discretion to cover more. For example, all states voluntarily 
     cover prescription drugs; some also cover institutional care 
     for mentally handicapped individuals and dental and vision 
     care for adults. Indiana is fairly generous, relative to 
     other states, in the optional services its Medicaid program 
     provides. States receive federal matching funds for these 
     additional services.
       What is the cost of Medicaid? The federal government does 
     not shoulder the cost of Medicaid alone; it is a shared 
     commitment with the state governments. The federal share is 
     at least 50% in every state, but can exceed 80% depending on 
     a state's per capita income. State participation is voluntary 
     but all states are currently in the program.
       The federal government spent $92 billion on Medicaid in 
     1996 and the states spent $69 billion. For the Indiana 
     program, the federal and state shares combined were around 
     $2.5 billion. Although much uncertainty surrounds projections 
     of growth in Medicaid, costs are expected to climb 
     significantly simply because of overall inflation in the 
     price of health care and an increased number of eligible 
     Americans.
       What has been done to curb costs? The rate of federal 
     Medicaid growth from 1988 to 1993 was substantial, averaging 
     almost 20% per year. The Medicaid caseload jumped sharply in 
     the last decade as court decisions and legislation extended 
     coverage. Congress enacted

[[Page E442]]

     reforms in 1991 and 1993 to curb growth of the program.
       1996 was a year of dramatically lower growth in Medicaid 
     costs, only 3.3%. However, it is unlikely to stay that low, 
     with program growth estimated to average almost 8% annually 
     over the next 6 years.
       Because of the extremely high rate of Medicaid growth, 
     Congress has examined ways to reform the program. The 
     previous Congress enacted a welfare reform law which is 
     expected to reduce Medicaid spending by $4 billion over 7 
     years largely because of restrictions on eligibility of non-
     citizens for Medicaid. In addition, a proposal to turn 
     Medicaid over to the states was included in a budget bill 
     vetoed by the President.
       What are the issues in Medicaid? The issues Congress faces 
     this session include whether Medicaid should remain an 
     entitlement, what national standards should be retained, and 
     how federal funds should be allocated among the states. I 
     favor retaining the entitlement status because eliminating it 
     would increase the number of disadvantaged persons without 
     coverage. I also favor greater flexibility in the 
     administration of Medicaid, including ways to organize and 
     deliver care, reimburse providers, and assure quality of 
     care. But I do believe it is necessary to maintain uniform 
     national standards, especially regarding who should be 
     covered and what basic services should be provided. Today 
     federal Medicaid funds are provided to states on an open-
     ended basis. Some limits on growth are necessary, possibly on 
     how much can be spent for each patient.
       Conclusion. For me the key questions in Medicaid are how to 
     improve coverage without imposing excessive burdens on the 
     taxpayers and how to curb excessive spending without imposing 
     unacceptable hardship on the poor. Congress is looking hard 
     at ways to improve the program and rein in its costs. Much 
     effort is necessary to slow the growth of spending by making 
     more efficient the delivery of health care. Part of the 
     answer is to expand enrollment in managed care and community-
     based care to control acute care expenses. The undesirable 
     alternatives are to cut eligibility or services, raise taxes, 
     or cutback reimbursement to doctors or hospitals. Great care 
     must be taken not to reduce needed services to the elderly, 
     the poor, and people with disabilities.

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